Another season has come and gone, and the real estate market is still undergoing a series or corrections. What are conditions like in Etobicoke right now? Like everywhere else in the province, housing values have dropped from their February peak. August was the first time in months that certain areas saw a slight increase in real estate prices. However, this slight increase was not across the board.
In some micro-markets, sales were slower, and prices dropped even more. Currently, entry-level properties account for the highest volume of sales, while luxury homes are taking longer than average to sell. The good news for all potential buyers is that inventory levels are still high at the moment. For many investors, these conditions make it the perfect time to consider adding to your portfolio.
Advantages of Investing Now
After years of competitive conditions, buying now is easier for two reasons:
- There is more inventory and less competition from other buyers. You are more likely to find and secure a suitable rental property.
- Prices are down. Homes in Etobicoke are never cheap, but they are less than they have been for several months.
Owning an investment property doesn’t just provide immediate income through rental payments. The real value is the gains in your net worth as real estate values increase over time.
Are there any Disadvantages to Buying Now?
No one can time the market perfectly. Buying now only to see prices drop is a risk every investor must always take. An uncertain market makes it very difficult to turn a profit in the short term. However, when investing for the long-term, these concerns go out the window. Even if prices drop again, you will see them increase over the next few years.
Keeping your eye on the market is critical to your success as an investor. Here are a few of our most up-to-date reports on Etobicoke:
- Are Prices in Etobicoke Going Down?
- Why Working with a Local Etobicoke Realtor® is More Critical than Ever
- Etobicoke Real Estate Then and Now
Options for Investors
The real estate market in Etobicoke is varied and diverse, from entry-level condos and bungalows to executive townhomes and brand-new, high-end estates. Currently, Etobicoke has 22 new developments in the works. Some of these are still in the planning stages. Others are well underway, and a few are recently completed and ready to go.
A resale home is one that someone has owned and lived in before. The downside is that they sometimes need a lot of work. Maintenance costs can add up, especially on older properties. Newer resale homes may need a few minor updates, but for the most part, they are move-in ready.
Advantages of Investing in a Resale Home
- The area is more established. Character and plenty of green space are two traits that often make older homes even more desirable than some new builds.
- Lower cost of purchase. A slowing market is the best time to buy a resale home. Lower prices increase your chances of finding an undervalued property, making it easier to generate positive cash flow.
- Recent upgrades add perceived value for potential tenants. A resale home can have many upgrades, including granite or quartz countertops, hardwood floors and energy-efficient HVAC–all valuable features you would pay a premium for in a new build.
The Advantages and Disadvantages of Investing in Pre-Construction
If you decide to invest in a pre-construction project, there are several things that you should be aware of. First of all, it can take a long time before the home is ready for tenants to move into. Delays are common, and cancellations can occur. Every delay puts the potential of rental income further back. Your deposit is tied up during this time and may prevent you from getting in on another opportunity.
However, investing in pre-construction can be the perfect opportunity for the right person who has time to wait.
- Lock in your investment with less cash outlay. All you need to get your foot in the door is a small deposit, which can often be paid in instalments.
- Benefit from equity gains now. You can buy now at today’s prices and enjoy equity gains as the real estate market rises in value.
- The chance to possess a valuable asset. Many people love the idea of being the first person to live in the unit and are willing to pay a premium for the privilege.
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The Keys to Successfully Managing Your Investment
Buying an income property is one thing. Holding on to it is a whole other challenge. Before adding a new investment to your portfolio, here are some things to keep in mind.
Know your carrying costs: Mortgage payments, insurance premiums, taxes and maintenance costs are a fact of life for every investor. In addition, you have to account for any time the unit sits vacant and there is no income coming in. For your peace of mind, you want some savings set aside to help you hold your investment property through the lean times.
Finding the right tenant: A good tenant can make your investment a dream come true. A bad tenant can do the opposite. Before signing a lease with anyone, vet all potential tenants carefully by performing background checks, credit checks, and criminal checks. If you can, get referrals from previous landlords.
How much should you charge? Setting the rent price is similar to determining a selling price. It’s not an easy decision, but factor in what the market will bear, the condition of the unit, and what amenities are nearby. Be sure to calculate your projected income minus your expenses to ensure you can hold the property for the long term.
Should You Hire a Property Manager?
These days, many people are hiring property management firms to handle their investments for them. Hiring out reduces your monthly income, but there are several benefits.
Besides the price, not wanting to be a landlord is the number one thing that scares away potential investors. It’s a rare person who looks forward to choosing a tenant, chasing rent payments, working with contractors and responding to complaints or disputes.
A property manager takes all of this off your plate. You simply collect your monthly rental payments and allow your equity to grow. The leverage a good property manager provides is what allows the most successful real estate investors to purchase many properties and grow their wealth.
Thompson Sells has been helping buyers, sellers and investors for over 30 years. If you need help or advice, reach out today by email or call 416-450-4900
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